drtta_agricultural_20130610.pptx

7/28/2019 DrTTA_Agricultural_20130610.pptx

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(2013.06.10)

Lewis 2 Sector model

Agriculture - low value added

Industrial sector - higher productivity and wealth generation

Incentives to encourage workers to migrate from rural economy tourban

Rural workers have very low if not zero marginal productivity

Wage premiums in urban industry 30% above rural wages wouldencourage migration from rural to urban whilst still allowing profitsto be made

Re-investment of profits would lead to a self perpetuatingdevelopment

Lewis two-sector surplus (or unlimited supply of labor )model,which views agrarian societies as consisting of large amounts ofsurplus labor which can be utilized to spur the development of anurbanized industrial sector.


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The Structure of the Lewis Model:

Dual economy


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The Law of Petty-Clark(A survey of 50 countries)

They discovered the phenomena of changes in

industrial structure in the increasing order of share

such as the primary industry < the secondary

industry < the tertiary industry, according to theincrease in the national income.

Due to the income inelasticity of demand for the

primary industry and to the decreasing returns ofthe secondary industry overtime.


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4

Classification of Industry

Agriculture

Forestry

Fishing

Primary Industry

Mining

Construction

Manufacturing

Secondary Industry

Electricity GasTransportationCommunication

WholesaleRetail trade

FinanceInsurance

Services

Government Administration

Tertiary Industry

Food Beverage

Textile

Wood Paper ProductsChemistry

Petroleum Coal Products

Steel

Metal Products

Machinery

Machine for Transport

PrintingPublication


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I. Importance of structural transformation in

agricultural development

The concept and contents of structural transformation:

The evolvement of growth and development patterns, promoting

increasing economic gains in the relatively limited endowments.

---productive resources allocation: natural, economic and humanresources

---institutional evolvement

---technology innovation: expanding production possibility and

improving efficiency of resources allocation

---industrial restructuring:---employment restructuring

Different stages needs different structure during the development

process


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Inter-linkage between structural transformation and

agricultural development

---resources reallocation from low productivity sector to thehigh one: land, labor, financial resources

---promote agricultural sustainable growth: diversification,

efficient factor and commodity market

---substantial increase of farmers income: higher returnsand diversified income resources

---upgrading of agricultural sector: specialization and

modernization

--- structural optimization in the areas of production,

investment and employment, etc.


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for developing countries, there need a comprehensive

agricultural structural transformation:

---assets distribution: initiative condition for sustainablegrowth

---institutional innovation: incentives

---economic structural adjustments

---technology innovation

---employment structural changes

---public goods and service delivery


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II. Where does structural transformation take place

1. Structural changes within agricultural sector

---staple crops and cash crops

---farming and forestry, animal husbandry, fishery, etc.

---extensive cultivation and intensive cultivation

---operational organizations diversification: household,cooperative and specialized agricultural firms

2. Structural changes in rural areas

---agricultural sector and non-farm sector

---rural industrialization and urbanization

---capital flows and labor, land reallocation


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3. Structural transformation in country-level

---balanced development between primary, secondary and

tertiary industries---transformation from traditional agricultural economy tomodern one

---market system transition

---regional economic structural transformation---the changes of terms of trade between different sectors anddomestic and external market

--- Dual economy


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III. The factors determine structural

transformation

---Factor endowment and its distribution

---Relative price changes of factors and commodities

---Economic and social Infrastructures

---Economic incentives and policy inducement

---Comparative advantages at household-, regional- and country-levels and its changes

---Efficiency of market: transaction costs; access to market;market segments.


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IV. Policy framework for agricultural

structural transformation

1. Productive assets redistribution:---land reform---human resource development2. Institutional arrangement---property right---market system---price---eliminate the constraints on smallholders---develop rural organization system which could provide

services for smallholders, strengthen their negotiationcapacity and overcome constraints of capital-intensiveinvestment.


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IV. Policy framework for agricultural

structural transformation

3. Technique policies--- R&D---technical extension---upgrading agricultural productionDesign and encourage adaption of new technology is the

responsibility of public sectors4. Public goods and service---Physical infrastructure construction: road, irrigation and market---vocational education and skill training5. Eliminate market imperfection---credit market

---factor market---commodity market---employment market6. Industrial policy--- adjust based on the comparative advantages


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V. Conclusions and implications

--- Structural transformation is very important to agricultural

sustainable and inclusive growth

--- For developing countries, it need to carry out a

comprehensive policy framework on realizing structural

transformation for agricultural modernization

drtta_agricultural_20130610.pptx

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